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Finance & 'things'

Working closely with people who are in clutter crisis I get to see a lot of very personal things. Paperwork in particular quickly reveals what is going on in a client's life. When I am sorting papers at speed I tend to just scan the contents to decide where they should be filed, but red bills and 'overdue' letters always jump out at me. The more credit card statements I open for a client, the more I know they are spending large amounts on unnecessary stuff. The more unopened post there is, the more likely it is that my client is in a financial mess and has gone into 'ostrich mode', sticking his or her head deep in the sand and hoping the money problems will go away.

I do not write as an accountant or financial expert ' there are plenty of publications devoted to managing your money effectively - but there are two simple rules re money:

1 If you haven't got it, don't spend it.

2 Know your limits and stick to them.

I don't want to be a killjoy, but I believe shopping really is the 'root of all evil' as far as clutter is concerned. Stop shopping! If you are trying to simplify your life, I recommend that you stop all shopping for a period of say, three months, apart from the absolute essentials, of course, such as food, loo rolls, etc. Your bank balance will increase and your clutter won't'!

It's really very comforting to give yourself permission not to spend money for a while and to make do with what you already have. It also saves you loads of time that you would otherwise have spent trudging around shops looking for things to buy.

Some common money traps

1. The lure of mail order

The majority of my most cluttered clients are avid catalogue shoppers and spend a fortune on stuff that they don't really need, although they truly believe that they do. When I try to persuade them to get rid of their catalogues in order to help them cut down on their spending, they become very anxious in case they don't have the opportunity to purchase these particular items again.

Everyone enjoys a wander through 'catalogue-land', but it's a dangerous place to go! I would advise that you flick through your catalogues as soon as you get them, but then bin them. The whole point of a catalogue is that it seduces you into wanting things you never knew you needed! Ask yourself if you can live without these items and don't be conned into placing large orders just to save on postage. Why spend £40 just to save £3.50 in postage, when you could actually save yourself £43.50 by throwing out the catalogue?

2. Supermarket seduction

There is a whole industry built upon how you, the shopper, behaves in a supermarket. Although you may not know it, you often buy exactly what the marketing experts intend you to buy! They plan which way you are going to walk around the store and set up tempting displays on the ends of aisles to ambush you and your wallet when you're least expecting it. One minute you're doing the grocery shopping, the next you find yourself with lacy lingerie and a couple of CDs in your trolley! Caveat Emptor! (Buyer Beware!)

If you're doing the food shopping at a supermarket, be strict with yourself. Don't be diverted into the clothes section or browse through the CDs and homewares, no matter where your wayward trolley might lead you! Unplanned browsing will not only eat into your time, but will also increase your expenditure, as you will almost certainly end up making impulse purchases! If possible, shop without the children so you're not inveigled into buying all sorts of rubbish, food or otherwise. Stick to your list, and if you can't find something, survive without it! Buy what you need, not what you think you'll need. Does it fit into a meal or school lunch? If not, (i.e. if it's just snacks), leave it.

3 Gym/health club membership

Do you make a charitable donation to your local health club every month? That's what you're doing if you have a gym membership but never go. Work out how often you really go to the gym each month and then divide that number into the cost of your monthly membership. If you're looking at a cost of something like £10-£15 per visit, then you are wasting your money. You are probably a reluctant gym user and you would be better off simply walking, swimming or going out to a keep-fit class once or twice a week at your local leisure centre.

4 Incidental eating out

Resist the urge for a quick cappuccino when you're out shopping, or taking the children for a burger and chips because they missed lunch. Casual snacking like this quickly erodes your cash and you've nothing to show for your spending apart from an empty wallet! Mealtimes at home are much cheaper, and better for your children too. If you can't avoid being out around mealtimes, then take things with you for the children to eat. Fill old lemonade bottles with water or squash so you don't have to buy drinks, and take snacks.

5 Buying in bulk

Bulk buying only works if you have somewhere to store all your purchases. If you have to live surrounded by loo rolls, giant boxes of washing powder and crates of dog food, then shopping in this way doesn't necessarily make your life simpler, it just makes it more cluttered. One of my clients buys all her household products in bulk from a cash and carry warehouse. She says it saves her money, but she has nowhere to put anything and so stores her bulk buys in the loft ' not the most convenient place to find your next loo roll! Because her house is so full, this lady needs to rent storage space elsewhere and so the money saved on bulk buying is gone. Unless you have a utility room or dry garage with plenty of storage space, let the shop store bulk items for you.

Buying in bulk can also make you less frugal in your usage. For example, if I buy a giant 24-pack of crisps, my children will pig out, but if I only buy a 6-pack, they will be far more careful in their consumption.

6 Cash and carry warehouses

Don't be fooled into thinking that these vast warehouses are cheap. Many places display their shelf prices without VAT. Take your calculator with you and add on the VAT to discover the total amount you will be paying. You may find that the special offers at your local supermarket are actually better value.

7 Cheap Stuff

There is a place in my very organised heart for bargain basement-type stores! They always sell a fantastic range of storage and organising solutions at rock-bottom prices and are like Aladdin's Cave, full of interesting bits and pieces that you never knew you needed! The danger of these stores is that they pile stuff high and sell it cheap and we buy far more than we need, just because we can't resist a bargain. I have a friend who spends a fortune in these shops and her house is full of tacky rubbish. She thinks she's saving money by buying this stuff, whereas in fact she is spending more than normal.

8 Charity shop bargains

Gone are the days when you could pick up things cheaply in a charity shop. I applaud the rise of charity shops as seriously well-run boutiques, but am disappointed that in many areas they have out-priced themselves. If you love browsing round charity shops, beware how much you can spend ' three items of clothing can easily set you back £15 or more. One of my clients was so addicted to buying charity-shop bargains that she had bags full of purchase that she had never worn or used. When I helped her de-clutter her bedroom, most of the items went straight back to the shop she had bought them from, ready priced! If you can't resist making purchases in charity shops, avert your gaze when passing the window and move swiftly on.

9 Magazine subscriptions

Review your magazine subscriptions. Do you just let the standing order continue from year to year without even thinking about it? Do you sometimes never even remove the mags from their plastic wrappers? Do you really read them or just flick through? Save yourself money by cancelling all your subscriptions and only buying magazines as an occasional treat.

One of my clients was a keen motorcyclist. He subscribed to several specialist bike magazines and had huge stacks of old copies going back about five years. He also ran several businesses and simply didn't have time to read the magazines. Most of them remained in their plastic wrappings and joined the ever-increasing pile at the bottom of the cupboard. I suggested that he cancel all his subscriptions and just buy his magazines individually from the newsagents as and when he wanted them.

10 Entertainment and socialising

Being sociable can be expensive ' eating out, babysitters, takeaways, drinks with friends, cinema trips, they all add up. Keeping a written record of all such spending for two or three months will show you exactly how much money trickles away unseen on these things. Of course, it would be a very dull life if you suddenly cut out all entertaining and socialising, but I believe this is one area you can cut back on without too much hardship. Limit takeaways to one a month, wait until films come out on DVD instead of going to the cinema, don't call in for 'a quick drink' on the way home from work, forgo the theatre visit. Invite friends round instead of going out, and ask everyone to bring food to share.

Top tip:

If money burns a hole in your pocket, then only ever leave home with the smallest amount. You will indulge in fewer impulse purchases and won't
be able to fritter it away on snacks,
newspapers and other sundries

Tips to stay in control of expenditure

1 Budgeting

If you lack organisation in other areas of your life, it's likely that your money and spending isn't very organised either, so as part of your overall reorganising project I would advise that you start some simple budgeting.

Get a small notebook and write down everything that you buy so you can work out exactly where your money is going. If you seem to make a lot of cash withdrawals, this is the best way of finding out where your cash is going. Track your spending meticulously for a week and you will see how a magazine here and there, bits of dry cleaning, the odd bunch of flowers, and miscellaneous purchases from the local shop can quickly erode your cash. Make a conscious effort to cut down on the casual daily spending and you will notice a difference in your wallet and ultimately your bank balance.

Allow yourself only a certain amount of cash every week and see if you can make it last. Whatever amount you withdraw from the bank you are likely to spend it, so limiting the amount is a good idea. If you are used to drawing out £50 a week, get £30 instead and make it last.

If you know that your spending is high in certain areas, such as clothing or entertainment, set yourself a monthly budget and stick to it. Sometimes not buying stuff can give you as much of a buzz as buying it, especially when you realise how much you haven't spent in a month.

2 Track your spending

When I work with clients who feel their finances are out of control, one of the first things I suggest is that they keep track of their daily spending by saving all receipts. The best way to do this is to set up a series of large A4 envelopes, labelled chronologically with the month and year. Keep receipts for everything you buy and put them into the envelope when you get home. At the end of the month add up how much you have spent in various areas such as food, clothes, entertainment, petrol, etc. Paperclip receipts together in each category and write the totals on the front of the envelope so you know how much you are spending each month. This is an excellent way of tracing where your money is going and can help you to identify areas of high spending. It's also handy to be able to lay hands on receipts if you need to return faulty goods to shops.

You might think all this sounds a bit labour-intensive!

I agree, compared with the fun of shopping, it's rather tedious, but it forces you to get your head out of the sand and look at what you're spending your salary on. You should have a good idea of where your money is going and this might be the wake-up call you need. Most people are shocked by their own spending when they do this exercise.

3 Saving receipts

One word of warning about receipt saving. One of my clients had kept receipts obsessively for the last 25 years and had boxes full of them. For her, these bits of paper had become sentimental items in themselves, reminding her of things she had bought when she was first married, clothes she had worn, etc. Don't go down this route; a receipt is a receipt ' it's just a bit of paper. If you are self-employed and the receipts show business expenses, then you should keep these for seven years, but otherwise don't keep receipts for more than a few months.

Another of my clients had got into the habit of keeping all her receipts because she wanted to check off her spending against her bank statements. With a backlog of several years of unchecked receipts and two young children taking up all her time, I knew that she would never get round to this mammoth task, but she insisted she would. When we costed in her time for doing all this checking, it worked out at hundreds of pounds, probably far more than she would have saved by discovering even one bank error!

This is meticulousness gone wrong. When you get so far behind with an obsessive task like this, there comes a point where you simply have to draw a line and start again. So what if you've lost a bit of money? Is it worth all the hassle to sort it out? I used to fight such things to the bitter end, but now I always put a price on my time, effort and angst and find it's simply not worth it. I don't want to waste my time fighting and feeling bad and therefore much prefer to shut up and move on.

4 Be a meanie

There's one very easy way to save money ' stay away from the shops! See if you can last a whole week without visiting the supermarket or the bank! Live frugally for a while.

Make yourself survive on what you have in the fridge, freezer and store cupboard. Most people have more food than they think.

Go through your bathroom cupboard and dressing table drawers and get out all toiletries that you've been given. Make it a rule to use all these up before you go out and buy anything else. And if you're running low on toothpaste or shampoo, make them last a but longer by storing them upside down!

There are many other areas of your home where you will have resources that you can use up before buying more. If you have a drawer full of birthday cards of gifts, use them. Consolidate all the pencils, pens and paper lying around the house, and again you will find there is more than enough to keep you going for quite a few months. Being frugal doesn't mean you have to go without, it just means you have to be more economical ' and organised. Just make a point of using up things that you already have before you buy more.

5 Keeping financial papers

You should keep bank statements, payslips, P60s, receipts, tax documentation and other financial papers for seven years, particularly if you are self-employed. Archive these papers in clearly labelled and dated boxes. Separate them into tax years or chronological years if you prefer. Keep papers from the last two years in an accessible place and store the rest.

6 Pay-back time

If you borrow cash, pay it back quickly. You might forget but the person you borrowed it from won't. If it's a small amount, they might be too embarrassed to ask, but it will niggle at them and make you look bad in their eyes. If you have difficulty remembering this sort of thing, then write it down. Don't say 'you must remind me' to the other person ' it's your responsibility to remember, not theirs.

7 Find the best deal

There are always better deals to be had ' you just need to take the time to find them. Mortgages, loans, utilities, mobile phones, insurance; look carefully at how much you pay for each of these. Take time to shop around and you may save yourself several hundred pounds over the course of a year. Read The Money Diet by Martin Lewis n

This extract was taken from 'Simplify Your Life Downsize and De-stress' by Naomi Saunders, by kind permission of Sheldon Press